More than a decade of waiting: Stamford-based firm starts California project

Richard Lee

Published 9:17 pm, Friday, December 28, 2012

Management at Poseidon Resources, faced with a complicated permit process and opponents at every turn, could have dropped its plans to build the largest desalination plant in the Western Hemisphere, but it persevered and has begun construction of the project in Carlsbad, Calif.

The Stamford-based business this month unwrapped a present that allows it to proceed with the project after more than a decade of planning -- a $922 million financing package.

Dickstein Shapiro, a law firm with offices in Stamford, Washington, D.C., New York and three cities in California, was the primary legal adviser to Poseidon since the company's inception in 1996 and led financing for the transaction, which includes $755 million in investment grade tax-exempt bonds and $167 million in private equity.

Co-located with the NRG Encina Power Station, the Poseidon Carlsbad Desalination Project will be operational in 33 months, producing up to 50 million gallons of drinking water per day and meeting about 7 percent of the region's water needs in 2020.

"It's been the most complicated project I've been involved with, and I was involved with the Iroquis Pipeline," said attorney Frederick Lowther, a partner at Dickstein Shapiro and a director and co-founder of Poseidon.

He attributed the delay to the lengthy approval process in California, which required 14 permits, and a long list of lawsuits aimed at blocking the project.

"We had 14 lawsuits and all were litigated to conclusion. The price is high, but what happens if you don't have water? What are the alternatives?" said Lowther, referring to drought conditions in Southern California.

A reliable water source is essential to the economic growth of Carlsbad, said Mayor Matt Hall.

"In all my years in office, I have never been witness to a project as well-vetted by the public," he said.

Similar facilities use the same technology in the Middle East, but they are energy intensive, resulting in high costs for the water, said Michael Campana, Ph.D., professor of hydrogeology and water resources at Oregon State University.

"I believe the San Diego County Water Authority will be paying double what they pay now," he said, adding that many residents are asking if conservation or recycling measures could have been enacted instead.